Employment Practices Liability Coverage
Employment practices liability insurance provides coverage for damages and defense costs related to employment-related claims made by employees against their employer. Such allegations can include discrimination, harassment and wrongful termination.
FAQs
What does employment practices liability cover?
There are numerous allegations an employee can make against your business that could result in an employment practices claim. Some of the most common claims include:
- Harassment
- Discrimination (based on sex, race, age, disability and more)
- Retaliation
- Wrongful termination
- Wrongful discipline
- Failure to promote
- Wage and hour violations
Employment practices liability insurance is typically written on a claims-made basis. This means that the incident resulting in the claim had to occur during the coverage term. Since employment related claims often come to light months or even years after the incident, your business can be vulnerable if your insurance coverage was dropped or if you didn’t purchase coverage that extends beyond the end of the policy period.
What kinds of businesses need employment practices liability coverage?
Employment related claims can affect companies of any size. Small and new business are often particularly susceptible to these types of claims because they often lack a legal department or thorough employee handbook. Employment practices allegations can negatively affect employee morale, damage the company’s reputation, disrupt operations and hurt your business financially. The costs associated with such claims are constantly rising and you don’t have to be in the wrong to be sued. If you have employees, you need employment practices liability insurance to protect your business and its assets.
What does employment practices liability insurance cost?
The cost of employment practices liability depends on a variety of factors such as how many employees you have, claims and lawsuit history, your employee turnover rate and what type of practices (like a robust employee handbook) your business has in place to prevent employment-related claims. This coverage can be written as a standalone policy or it can sometimes be endorsed onto an existing general liability policy.
What can I do to prevent employment practices liability claims?
Prevention is often the most effective way to avoid harmful employment practices allegations. The risk of an employment related claim can begin during the interview process or even years into an employee’s tenure at your company. Consider utilizing some of the below methods to reduce your risk.
- Create an employee handbook that details your company’s workplace policies and procedures
- Develop job descriptions for each position that clearly define performance expectations
- Have management and employees take training on sensitive topics like sexual harassment
- Complete regular performance reviews of employees
- Implement a thorough record-keeping system to document employee issues and the company’s response
- Conduct screening of potential employees, including background checks, prior to making job offers